Best Start-up from 14 Tech Heroes 01-12

Best Start-up from 14 Tech Heroes

Some say that people do not really want advice, even when they ask for it — but when starting a company, good advice early on can be the difference between success and failure. For this reason, it is common practice for startups to have an advisory board — a group of smart people they trust to help steer them through hard times and open doors for them along the way. While I agree with Paul Brown that setting up an advisory board is essential, I think you can get a lot of everyday wisdom from those who have gone before you (and who have been successful) by just reading their interviews, speeches and memoirs. Their advice is often pithy, profound and, if followed, can save you a lot of time, money and headaches along the way.

Here are some of my favorite quotes and lessons from the tech superstars of our time.

“An entrepreneur is someone who has a vision for something and a want to create.” -David Karp, Tumblr founder and CEO

“A ‘startup’ is a company that is confused about three things: (1.) What its product is. (2.) Who its customers are. (3.) How to make money.” – Dave McClure, 500Startups co-founder

When read together these quotes highlight the contrast between being an entrepreneur and actually running a startup. Most entrepreneurs have a very clear vision of what they want to change in the world. They want a physical product, a new web application or a community they were not able to find elsewhere. However, having a good idea is just the first step in a long journey. To be successful, an entrepreneur must be able to answer all of the questions Dave McClure poses and execute a plan to bring the idea to market. Even the cleanest idea can quickly become the messiest startup.

On Being Brave

“You jump off a cliff and you assemble an airplane on the way down.” – Reid Hoffman, LinkedIn co-founder

“Fearlessness is like a muscle. I know from my own life that the more I exercise it, the more natural it becomes to not let my fears run me.” – Arianna Huffington, President and Editor in Chief of The Huffington Post Media Group

DAVOS/SWITZERLAND, 26JAN11 - Arianna Huffingto...
Arianna Huffington, Co-Founder and Editor-in-Chief, Huffington Post, USA, speaks during the session ‘The Future of Employment’ to start at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 26, 2011. (Photo credit: Wikipedia)

Everyone knows that it takes guts to take the “entrepreneurial leap of faith,” but what few founders mention is that you have to keep leaping over and over again as long as you are in business. Building a business in not a one-time thing. It is not like a house where you build it and then it is done. You have to keep testing, reinvesting, extending, partnering, and taking risks you hope, but cannot guarantee, will pay off in order to build a successful company. It takes bravery to be an entrepreneur from start to finish.

On Funding

“Stay self-funded as long as possible.” -Garrett Camp, founder of Expa, Uber and StumbleUpon

“Chase the vision, not the money; the money will end up following you.” -Tony Hsieh, Zappos CEO

“Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations.” -Tim O’Reilly, O’Reilly Media founder and CEO

I picked these quotes, but could have selected hundreds of others just like them. While venture funding may seem glamorous from the outside, the one thing that almost every CEO will tell you is that raising money is the worst part of their job. Try to go without if you can and if you are going to raise capital, take as much as you can up front so you can focus on the company and not on constant fundraising. A “tour of gas stations” is the worst path for everyone.

On Product Development

“Get five or six of your smartest friends in a room and ask them to rate your idea.” -Mark Pincus, Zynga CEO


Sales Tips and Sales Quotes from 62 Top Sales Experts
Ken KrogueKen Krogue
Contributor

10 Founders On What They Don't Tell You About Building A Startup
Hollie SladeHollie Slade
Forbes Staff

“Wonder what your customer really wants? Ask. Don’t tell.” – Lisa Stone, BlogHer co-founder and CEO

“Your most unhappy customers are your greatest source of learning.” Bill Gates, Microsoft co-founder

These quotes are in this order because they apply to different parts of the building cycle. Before launch, getting feedback from your smartest and closest (and most honest) friends is essential. Once you have customers, start surveying them and you will be surprised what you will learn. When your product is more mature and people are familiar with your brand, the vocal “unhappy customers” are the best resource you can have because they will tell you things that happy customers (those who take the time to fill out your surveys) never will.

Effort And Focus

“The last 10% it takes to launch something takes as much energy as the first 90%.” -Rob Kalin, Etsy founder

“Make every detail perfect and limit the number of details to perfect.” -

Just remember that everything takes longer and costs more than you will expect. It is hard when you are so close to the finish line of a new launch, for example, not to feel frustrated that small things are holding up the process – but they always do. Because of this universal truth, the key is to keep the number of things you are trying to accomplish to a minimum and focus on doing them very very well.

On Hope

“Don’t worry about failure; you only have to be right once.” -Drew Houston, Dropbox founder and CEO

“Fail early, fail fast, fail often,” is practically a mantra now on the West Coast. Failure is part of the learning process and each failure provides valuable information about how to succeed in the future. It is easy to intellectualize, but all of that failure can take a hefty mental toll. I love Drew’s quote because hope is what helps people endure the relentless failure of entrepreneurship.

Summary

“Timing, perseverance, and ten years of trying will eventually make you look like an overnight success.” -Biz Stone, Twitter co-founder

If you are lucky, all of the struggle and hardship of entrepreneurship will finally pay off.  However, before you begin, you need to be ready for the long haul. Biz’s point is that almost everything we think of as an overnight success took much longer to build than it appears. If your plan is to make a quick killing, entrepreneurship is not for you. If you have an idea you are passionate about and you (and your family) are up for the challenges, disappointments, joys and triumphs of ownership – jump on in.

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The Start-up Turning Point: When You Need to Ask for Help 11-19

The Start-up Turning Point: When You Need to Ask for Help

It was another hair-pulling day on the startup front lines. Scott Rousseau had spent $700 to exhibit his gourmet sea salt at a retail trade show, but the place was a ghost town. "Nine hours a day for three days in a row, and it was a dead loss," recalls Rousseau, owner of Woburn, Mass.-based Beyond the Shaker  .

Worth his salt: Scott Rousseau of Beyond the Shaker.

Photo © Kristin Teig

Rousseau and the exhibitor in the next booth, a woman with a jewelry line, had plenty of time to get to know each other. A month later she reached out to him with an idea: She suggested that Rousseau take part in the wholesale New England Made trade show, despite its expensive price tag. Rousseau risked $2,000 on the tip, purchasing a booth at the 2012 show. The move paid off: He closed deals with 15 stores and two distributors. One of the distributors had her own trade show, which in turn led to 10 more accounts--a breakthrough event critical to Beyond the Shaker's growth, as it moved the company's focus to the wholesale arena.

There's an irony at the root of entrepreneurship. You start a business to be self-sufficient and self-directed, but you can't achieve that without other folks lending a hand along the way. Particularly in a venture's early days, you are hardly a rugged individualist--more like a humble supplicant, reaching out for a sale, a distributor or an investment wherever you can. Contrary to the myth that entrepreneurs are one-person shows, there are hordes of people and events along the way that make small businesses possible. Knowing the scenarios that can help push a startup from treading water to liftoff--those crucial turning points--is essential for any entrepreneur.

The catalysts for such events come in many forms. It may be the introduction of key investors, manufacturers or clients; luck or serendipity can be factors as well. But the vast majority come from changes in attitude and tough personal choices.

It Can't Hurt to Ask

Opportunities for turning points don't fall from the sky. Change comes from relationships--connecting with others in a way that allows your idea, enthusiasm or opportunity to strike a chord. The critical lever is candor: treading that fine line between projecting credibility and being unashamed about your basic needs. "Being an entrepreneur and being shy don't go together," says Jay Miletsky, founder of New York-based MyPod Studios, part of the $7 million Sequel Media Group. "You can't be bashful in making a request."

Miletsky wasn't, getting his original investment of $400,000 from his girlfriend's boss and an acquaintance in his family network. He launched his site in 2010 as a platform for businesses to share videos with clients outside of YouTube. But the sales cycle was too long for corporate clients, and his initial investor was calling twice a day for progress reports. After three "very miserable" months, he turned to a not-so-near acquaintance: his mother's friend's daughter's husband.

The two weren't particularly friendly, but necessity is the mother of geniality. "I knew he was in this industry," Miletsky recalls. "I asked him, ‘Can we grab lunch?' I told him, ‘I know you know a lot about this industry, and I'd like some advice.' Everyone likes to feel they can give advice."

Turned out the man had funds, a small incubator for new online ad businesses and the contacts needed to shift MyPod Studios to a consumer, ad-supported video site. Without him, Miletsky says, "we would have been hard-pressed to afford being able to make the switch."

One Big Buyer

For consumer products, finding an influential buyer is a time-tested route to success. It often happens when someone at a large retail operation opens doors to shelf space, influencing others. For Ginny Simon, a former nutritionist in Miami who started ginnybakes  , a line of organic, gluten-free bake mixes and cookies, that key force was Eddie Niemes, manager of a Fresh Market grocery. Niemes tasted the product, liked it and sent it to company headquarters in Greensboro, N.C., where it got the thumbs-up for distribution among all 120-plus Fresh Market stores.

Ginny Simon of ginnybakes found a recipe for success.

Photo © Joe Sands

"If it wasn't for Eddie, I don't think there would be a ginnybakes," Simon says. "He gave me my first break." Simon, who launched her venture in 2010 for $25,000, has ridden that break far. Not long after Fresh Market accepted her products, she got into Whole Foods Markets in the Southeast, and later into 70 Publix stores. Ginnybakes expects to see sales of $3 million to $5 million next year. Simon's husband, Steve, has quit 26 years of lawyering to help manage the company.

"The local Whole Foods and Publix buyers believed in me and my product and that the local community would want it," Simon says. "And we had the right product at the right time. I would say it's karma. We were at the head of the trend to gluten-free."

Mentorship with Meaning

While Simon's turning point happened quickly, for Richelieu Dennis of Amityville, N.Y.-based Sundial Brands  , it took 20 years and a bit of expert guidance.

Dennis and childhood friend Nyema Tubman, exiled from their native Liberia by civil war, sold shea-butter soaps, crafted from a recipe by Dennis' grandmother, on the streets of Harlem in the 1980s and '90s. They then graduated to flea markets, festivals and county fairs. "There were so many no's, so many artificial barriers," Dennis says of breaking through to a larger market. "The ability to forget is a prerequisite for an entrepreneur."

Photo courtesy of Sundial Brands

Store buyers pigeonholed his hair and skincare products as ethnic items that should be sold at bargain-basement prices. But Dennis saw Sundial as a premium brand with appeal to all. For 20 years the company's long-term solvency was uncertain, but the partners persevered until they met Macy's buyer Debbie Murtha at a diversity fair. She gave them a primer on branding and pricing, leading to an order from Macy's in 2008.

The right mentor made a difference for Sundial. "She gave us access to high-level retailers and the opportunity to be successful. It was truly, incredibly validating after so many years," Dennis says.

The Macy's cachet led to an even bigger buy from Target, where Sundial launched its SheaMoisture brand in 2010. Before the Macy's order, Sundial had 20 employees; today the company has 100.

Seeing With Fresh Eyes

Even experienced entrepreneurs don't have all the answers, so an unbiased outside opinion can offer clarity. At Redbubble, a website where independent artists sell wall art, T-shirts and other products, company identity was a sticking point. Board members had initially positioned Redbubble as a market for high-end art. But after the Melbourne, Australia-based company invested $150,000 in an outside review with focus groups, they learned that consumers were more interested in unique items selling for less than $60.

"We ended up riding a wave we didn't know existed: people against mass products," co-founder Martin Hosking says. The company rebranded after the study, resulting in 100 percent sales growth annually for the last four years. Redbubble now has annual sales of $25 million.

New perspectives also helped Adam Miller, CEO of Cornerstone OnDemand, a company that sells cloud-based talent management and human resources software. A trip around the world when he was 25 taught Miller that he didn't have all the answers, and that he needed to watch his step: A slip on an icy Himalayan ridge almost cost him his life before a Sherpa guide caught him.

Miller, who started Cornerstone out of his New York apartment in 1999, brought in a consultant in 2005 to help with another slippery slope. His sales team didn't seem to know how to solution-sell and weren't using case studies of early clients effectively. Additionally, the company name, CyberU, "didn't give prospects the feeling the company was viable," Miller notes. His goal was an IPO, but Cornerstone "was nowhere on track to be a public company," he says.

Miller decided to "fire" himself, take some time away and come back with fresh eyes. "It's remarkable what you can see when you do that," he says. "I saw all the things that were wrong with the business."

After attending a sales seminar by Steve Martin, a business consultant and author, Miller asked if they could meet. Martin told Miller to act as if the firm had only 12 months to live; in other words, to rethink everything. Miller wound up changing the company name, repositioning and reinventing the sales operations. After the makeover, Cornerstone went on to raise its first venture capital round and in 2011 had a successful public offering. Today its products are used in 190 countries.

Was it a stroke of genius or luck? "Luck is part of it sometimes," Miller admits, "but fortune favors the prepared."

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The Surprising Economics of Sustainability 09-01

The Surprising Economics of Sustainability

One finding in a recent Office Depot survey of small-and medium-sized businesses (SMBs) and environmental sustainability was strange: 66% of SMBs said they were not going greener, often due to concerns about costs, and 34% were actively going greener, often motivated by saving money.

How is it that the same action - going greener - could have opposite economic outcomes: higher costs for one set of SMBs and lower for another?

I believe the answer is due to perception versus reality.

The SMBs concerned about costs are allowing perception to stop them, and the SMBs going greener have uncovered the surprising economics of environmental sustainability. Which group are you in?

If you are in the first group, and have no plans to go greener due to concerns about cost, let's explore your perception. Your view may not be surprising as it is common to think everything green costs more. In fact, the marketing research world has a stock question, "How much more would you be willing to pay for a green product?"

I would argue that the question is ineffective because it reinforces a false perception based on some greener options that do cost more: organic products; solar panels; carbon offsets, hybrid cars, and recycled copy paper. These products are all more expensive than non-green alternatives, but are they the only options when going greener? The answer is no.

If you are in the second group, motivated by saving money, you've probably discovered what I call the "Three Saves of Green": save initial cost, save operating cost, and save repurchase cost. Some examples:

Save initial cost: Avoiding waste is greener because waste costs money and uses resources but provides no value. Refurbished technology, toner and furniture items are greener because they are reused, and almost always are less expensive. And many everyday items that SMBs use, such as office supplies, cleaning products and shipping materials, have greener options at lower initial cost than less green alternatives. Seek, and you shall find.

Save operating cost: If an item is inexpensive to buy but expensive to operate, it is not cheap. Smart SMBs save operating costs by considering the Total Cost of Ownership (TCO) of the choices they make. Lighting is a good example. Greener lights almost always cost more upfront but save money over time. Compact Fluorescent Lights (CFLs) have a payback period of less than three months, and the latest Light Emitting Diodes (LEDs) can pay for themselves in under a year. 

You can also avoid unnecessary lighting by installing reflectors above your lamps or motion detectors in low-traffic areas. Choosing efficient technology and appliances, or using the cloud instead of onsite servers, also delivers operating cost savings. In fact, nearly everything you do to improve operational efficiency will improve your environmental sustainability - and save you money.

Save repurchase cost: If an item is inexpensive to buy but needs to be purchased again and again, it is not cheap. Choosing durable, modular and reusable products can deliver SMBs economic benefits because your upfront investment in quality and durability will help avoid regular waste and cost associated with one-time-use. Simple things such as rechargeable batteries and reusable dishware typically deliver these types of savings; as do more complex options such as durable and modular furniture and workstations. If you're trying to build a business that lasts, it makes sense to buy products that last.

So going greener does not equate to paying more. The truth about the economic impact of environmental choices is that it depends on the specific choices you make.

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The Salesman and the Developer 05-13

The salesman and the developer

By DANIEL TENNER

A salesman and a developer go on a bear hunting trip.

They arrive at the cabin in the woods and start unpacking the car, moving stuff into the cabin, getting things ready for a week of bear hunting in the wilderness. The salesman quickly gets bored of this and says:

"Tell you what, you continue unpacking and getting everything ready, and I'm going to go and find us a bear."

The developer sighs and nods (he's used to salesmen), and continues setting up while the salesman vanishes in the woods.

Half an hour later, as the developer is about three quarters done with getting things ready (the cabin is now all neat and tidy at last), he hears a very loud growl as he comes out of the cabin. Twenty metres away, the bushes start shaking. Out shoots the salesman. Right behind him, a huge, snarling, drooling, roaring monster of a bear. It's twice the size of a normal bear, and it's very, very angry.

As the developer hides behind a chair, the salesman runs right up to the cabin, with the bear on his heels, and just as he's about to go through the door he quickly leaps to the side. The bear crashes past him right into the cabin, and the salesman deftly closes the door right behind, locking the bear in. Loud noises can be heard as the bear begins trashing the inside of the cabin.

The developer emerges from behind the chair. The salesman cheers and says:

"Woohoo! That's the first one. Now, you kill him and skin him, I'll go find us another!"

Two perspectives

There are two ways to understand this story, and which way you favoured largely depends on whether you're a "builder" type or a "sales" type.

If you're a builder type, you see this as a great story that illustrates a common problem with salespeople: they don't seem to care about what happens after they make the sale. Actually delivering the project is hard work, but by then the sales guys have moved on to something else, so they don't care (and, as an additional problem, in some industries the salespeople will sell stuff that can't be realistically delivered).

However, if you're a sales type (like my cofounder, Paulina), you have a different perspective on this story. It's yet another story that makes fun of salespeople while completely discounting just how hard it is to not only find that damn bear, but bring it back and get it through the door.

Who's right, then? Both, of course. In business, you need both to find and sell clients, and the ability to then deliver what you sold them. One without the other is not a business.

Sales is not optional

Many people who "do startups" these days are from a technology background. In other words, they're builders rather than salespeople. And, like all builders, they tend to disregard sales as something that can happen later, something secondary that we'll solve when we get to it.

Well, sales isn't secondary. Speaking as a builder type myself, and having experienced businesses both with competent sales and without, I now believe that having someone whose job it is to go and find clients willing to give you money from day one is so important, that I would not start any company without such a person.

Sales don't happen without someone energetically pushing the product, service, or whatever it is you're intending to sell. Some may dream of products that sell themselves, like Dropbox or the original Apple II, but even awesome products like those took serious sales effort to get off the ground. Apple had Steve Jobs, one of the master salesmen of his generation, pushing the product everywhere he could and striking bold deals to get the company off the ground. Dropbox endlessly tweaked their referral scheme before they went viral.

Some few businesses like Google or Facebook or Instagram get to figure out the business model later. They can do without sales, perhaps. But this model only works in one place in the world, and unless you're starting up in the Silicon Valley bubble, your business is not a business without sales.

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Entrepreneurs Shouldn't Pitch Their Ideas To Venture Capitalists!!!! 05-03

Entrepreneurs Shouldn't Pitch Their Ideas To Venture Capitalists


John Greathouse
(courtesy Forbes)



Although it is tempting to overly intellectualize modern-day venture capital, its underlying construct has been part of human society for thousands of years. From the earliest days of seafaring traders, affluent dilettantes have been entrusting their capital to less-affluent, enterprising workers willing to share a portion of the resulting gain with their benefactors.



Two early venture capitalists were King Ferdinand and Queen Isabella, who backed Christopher Columbus. The traits these royal investors sought in Columbus are surprisingly similar to the characteristics modern investors look for when evaluating startup teams.

Ideas are infinite, and in the absence of competent execution, they are worth nothing. Nada. Zip. Zero. Conversely, money in pursuit of outsized returns is plentiful. Thus, if both ideas and money are abundant, what is the scarce constraint in the fundraising equation?

Trust.

Skilled entrepreneurs bring ideas and money together by building a bridge of trust.

If you are fortunate to pitch a sophisticated investor in person, assume they already believe in the veracity of your idea, the market and the underlying technological trends. Unless an investor specifically asks you to educate them regarding your space, focus your pitch on why you and your team are uniquely qualified to exploit the opportunity and turn the idea into a lucrative, self-sustaining business.

In too many instances, when entrepreneurs come to Rincon Venture Partners’ offices to pitch me and my partners, they waste valuable time attempting to sell us on the opportunity, often even after we say, “we believe in the opportunity, now tell us why we should place a bet on you.”

Grubbing For Money

“Grubstake” is a very American word, combining “grub” meaning “food” with “stake” meaning “a share or interest in a commercial enterprise.” A grubstake often involved the financier or Grubstaker funding the Grubstakee entrepreneur’s food, lodging and tools.

Modern venture capital differs only slightly from the grubstaking that was commonplace in the Western United States during the latter portion of the 1800s.  Frontier financiers put credence in the same characteristics valued by Ferdinand, Isabella and 21st century investors.

Informal Education – Consideration of a Grubstakee’s formal education was usually irrelevant. If the Grubstakee had any “book learning,” it was seldom directly applicable to the nature of the grubstaked venture.

As a VC, I do not care if you attended an Ivy League school, a community college or if you only have a high school degree. What concerns me is the depth of the knowledge and experiences you can apply to your venture.

Stewardship – Because the Grubstaker was directly footing the Grubstakee’s bills. A miserly approach to spending was a prized Grubstakee trait. I likewise value an entrepreneur who treats my money like their own and understands the difference between spending and investing.

Clean Backtrail – Without email, LinkedIn, Twitter or even an iPhone, Grubstakers were still able to verify a Grubstakee’s propensity toward honesty, integrity and hard work. By asking a few well-placed questions to the folks who had previously crossed paths with the Grubstakee, the Grubstaker could confirm whether or not their trust was well placed.

No matter how much trust an entrepreneur builds during our interactions, I always verify the veracity of their claims and prior accomplishments by speaking to people with whom they previously worked. Confirmation from people whom the entrepreneur did not cite as a reference is vital.


No B.S. – A firm handshake, coupled with direct eye contact, was often the only contract underlying a Grubstake deal. As such, communication had to be clear, open and direct.

I have no interest partnering with an entrepreneur who only communicates positive information, while obfuscating negative issues. As such, part of our diligence process includes assessing how clearly and honestly the entrepreneur communicates.


Sticktoitiveness – Most Grubstakees felt honor-bound to do everything within their control to repay the grubstake, even if their venture never generated a profit. I similarly seek entrepreneurs who perceive failure as a personal affront and refuse to walk away from a venture, even when success seems remote.

Shared View Of Success – The Grubstaker was rewarded when the Grubstakee succeeded. Such alignment minimized the risk that self-dealing, by either party, would derail the venture.

To this end, I spend significant time discussing the definition of success with our entrepreneurs to ensure that we share similar expectations regarding an acceptable exit.

Fear Of Failure – A grubstake was intended to facilitate the Grubstakee’s basic survival while he pursued his venture. If the grubstake was too large and the Grubstakee was not adequately motivated, the venture would fail. Effective Grubstakees were sufficiently dissatisfied with the lifestyle afforded by the grubstake and did not consider free room and board “success.”

In the same vein, I seek entrepreneurs who celebrate product, customer and partner victories and do not consider fundraising milestones a measure of their success.

Think Stewardship

The second time Christopher Columbus pitched Ferdinand and Isabella (two years after his initial presentation – raising money has always taken patience and persistence), he did not need to convince them that locating a shortcut to the spice routes of India was a good idea. Rather, he had to belie their primary concerns: was he honest, tenacious and competent enough to execute the journey?

The same precept holds true today. If a VC grants you an in-person meeting, it is doubtful they need to be sold on your idea. Thus, use such high-touch interactions to build a bridge of trust and convince your would-be investors that you will be a trustworthy and capable steward of their money.

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